Predictions on the impact of the coronavirus crisis on the space industry
The risk that space projects will suffer from the health and economic crises linked to COVID-19 is significant. It is impossible to predict the future, but if you study the past, you will see that not all the protagonists suffer the same fate during and after crises.
A painless or disastrous crisis for the budget of space agencies
During the 2008 subprime mortgage crisis, NASA’s budget barely fell. It remained stable between 2008 and 2009 and started to rise again in 2010. This may be a sign that the American government has to protect public jobs when the economy falters. Hopefully they will keep the same philosophy in the months and years to come.
Conversely, the liberalization of the Russian economy in the 1990s and the economic collapse that accompanied it were very hard on the country’s space program, with a drastic reduction in the resources allocated to the space sector. Nowadays, Roscosmos still has to work with very tight budget.
The COVID-19 crisis will have a strong impact on private space companies
However, we can predicte with certainty that the future will be difficult for private space companies, especially those that are still in the development phase. To be able to develop, these companies must raise funds. Historically, the financial and economic crises have been accompanied by a significant reduction in venture capital. During a crisis, investors seek security more than performance.
The New Space industry has raised nearly $26 billion over the past decade, which has helped fund the development of SpaceX, Rocket Lab and many other private space companies. But after years of recklessness, it looks like we have entered a speculative bubble situation because there are currently more than 150 private launchers in development worldwide.
The economic shock of 2020 could trigger the bursting of this speculative bubble. A drastic drop in investments will lead to bankruptcies, which would have happened sooner or later. However, the crisis of the early 2000s did not end the internet, quite the contrary. Likewise, the coronavirus crisis will certainly not generate the end of the New Space.
All space projects are threatened by the coronavirus epidemic
There is, however, a certain inertia in the development of space projects. This is what makes their management complicated in Western democracies. Ideally, a space policy should be thought of in terms of decades. Some projects are spread over 30 to 40 years between the first concept studies and the end of the mission, which is not very compatible with presidential terms which last four or five years at best.
It is difficult to predict whether the coronavirus crisis will result in cancellations of space projects already underway. Artemis, WFIRST, Chinese lunar program … No space project is immune to this threat. More immediately, the containment obligation may also cause some space projects to fall behind. This is a completely new situation, which is why it is not necessarily relevant to think that scenarios linked to past crises will repeat themselves identically.
The coronavirus epidemic is already having a significant impact on the space industry
The coronavirus epidemic is impacting all of humanity. It is becoming increasingly difficult to organize meetings, tests and any activity that involves bringing people together in one place. International collaborations such as the Russian-European Rosalind Franklin mission are particularly affected.
NASA has already ask two of its research centers to work remotely after employees tested positive for coronavirus. The SATELLITE 2020 conference, meanwhile, ended a day earlier than expected and almost all space-related conferences and events are about to be canceled.
The situation is not ready to improve, on the contrary
In the longer term, the coronavirus crisis could have a major impact on all space-related subjects. If it continues, we should therefore expect a particularly violent shock to the economies worldwide. With a health crisis, a banking panic or even mass unemployment, the budgets of space agencies risk melting like snow in the sun.
The same goes for the venture capital that powers the New Space sector. Investors are likely to be more cautious, which could lead to numerous bankruptcies in the space industry.
